Fleetwood Enterprises Inc/DE/ - Free Writing Prospectus - Filing under Securities Act Rules 163/433 (FWP)
19 Junho 2008 - 6:02PM
Edgar (US Regulatory)
Filed Pursuant to Rule 433
Registration No. 333-128123
June 19, 2008
FLEETWOOD ENTERPRISES, INC.
Free Writing Prospectus
Information contained in the
following investor presentation was used by
Fleetwood Enterprises, Inc. (the Company)
and Lehman Brothers
Inc. in connection with certain investor presentations relating to the offering
of securities
.
Forward-Looking Statements
Some of the statements contained in this free writing
prospectus may constitute forward-looking statements within the meaning of the
federal securities laws. Statements that are not historical facts, including
statements about our beliefs and expectations, are forward-looking statements.
These statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict. More detailed
information about factors that may affect our performance may be found under Risk
Factors in the preliminary prospectus. Any forward-looking statements included
in this free writing prospectus are based on information available to us on the
date of this free writing prospectus. We undertake no obligation to update or
revise any forward-looking statement, whether as a result of new information,
future events or otherwise.
The Company has filed a registration
statement (including a prospectus) with the SEC for the offering to which this
communication relates. Before you invest, you should read the prospectus in
that registration statement and other documents the Company has filed with the
SEC for more complete information about the Company and this offering. You may
get these documents for free by visiting EDGAR on the SEC Web site at
www.sec.gov. Alternatively, the Company will make the latest prospectus
available at www.fleetwood.com.
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0 2008 Investor Presentation HOME AWAY FROM HOME
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1 This presentation contains certain forward-looking statements
and information based on the beliefs of Fleetwoods management as well as
assumptions made by, and information currently available to, Fleetwoods
management. Such statements reflect the current views of Fleetwood with
respect to future events and are subject to certain risks, uncertainties, and
assumptions, including risk factors identified in Fleetwoods 10-K and other
SEC filings. These risks and uncertainties include, without limitation, the
lack of assurance that we will regain sustainable profitability in the
foreseeable future; the effect of ongoing weakness in both the manufactured
housing and recreational vehicle markets; the effect of the 18.4% drop in
manufactured housing industry shipments in calendar 2007; the effect of a
decline in home equity values, volatile fuel prices and interest rates,
global tensions, employment trends, stock market performance, availability of
financing generally, and other factors that can have a negative impact on
consumer confidence, which in turn may reduce demand for our products,
particularly recreational vehicles; the availability and cost of wholesale
and retail financing for both manufactured housing and recreational vehicles;
the availability and pricing of manufacturing components and labor, as well
as changes in labor practices, which may significantly affect our results of
operations; our ability to comply with financial tests and covenants on
existing debt obligations; our ability to obtain, on reasonable terms if at
all, the financing we will need in the future to execute our business
strategies and to meet the repayment terms of our outstanding convertible
debt instruments, including the $100 million 5% convertible senior
subordinated debentures, some or all of which the Company may be obligated to
repurchase in December 2008; potential dilution associated with future equity
financings we may undertake to raise additional capital and the risk that the
equity pricing may not be favorable; the cyclical and seasonal nature of both
the manufactured housing and recreational vehicle industries; expenses and
uncertainties associated with the entry into new business segments or the
manufacturing, development, and introduction of new products; the potential
for excessive retail inventory levels in the manufactured housing and
recreational vehicle industries; announcements of alliances, mergers or other
relationships by or between our competitors and/or our suppliers and
customers; developments related to regulatory and zoning regulations; the
volatility of our stock price; repurchase agreements with floorplan lenders,
which could result in increased costs; potential increases in the frequency
of product liability, wrongful death, class action, and other legal actions;
and the highly competitive nature of our industries. Safe Harbor Statement
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2 Presentation Team Elden Smith, President and Chief Executive
Officer After a seven-year retirement, returned to Fleetwood in March 2005 as
President and Chief Executive Officer Before retiring, worked for Fleetwood
as the executive in charge of the Recreational Vehicle Group from 1973 until
1997 Boyd Plowman, Executive Vice President and Chief Financial Officer Named
Senior Vice President and Chief Financial Officer in October 2000 and
promoted to Executive Vice President in December 2001 Joined Fleetwood in
1969, serving as Chief Financial Officer for 14 years before leaving in 1987
Rejoined Fleetwood in 1997 as Vice President-Retail Housing as well as the
Senior Vice President and Chief Financial Officer of its subsidiary,
Fleetwood Retail Corp. Andrew Griffiths, Senior Vice President and Chief
Accounting Officer Joined Fleetwood as Vice President, Controller and Chief
Accounting Officer in February 2004 Managing Director with
PricewaterhouseCoopers from 2002 to 2004 15 years of experience with Arthur
Andersen, becoming a partner in 1999
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3 Investment Highlights Market Leader in Core Business Lines #1
Market Share in Class A Motor Homes #2 Market Share in Motor Homes Overall #2
Market Share in Manufactured Housing Strong brand recognition across
consumers and dealers Demographic Trends Favor Primary Businesses Targeted
age range expanding as Baby Boomers age, people live longer and enter market
at an earlier age Experienced Management Team Effectively Restructured
Company Streamlined core businesses and operations into market-focused profit
centers Increased revenue per associate by 15% Pursued aggressive cost-cutting
measures Market Expansion Opportunities Available Across Business Lines RV
rental activity showed 30% growth in 2007 Increased demand for affordable
housing with reasonable lending policies Focus on Innovation and Improvement
in Both Industries RV Group Successfully increased product offerings Secured
strategic alliance with Bank of America to provide RV Financing Housing Group
Constantly improving products and Customer Satisfaction Indices Pursuing new
business opportunities Operating leverage and large NOL provide upside
earnings potential
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4 Company Overview Factory-Built Housing Recreational Vehicles
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5 Background and History Recognized leader in both recreational
vehicle (RV) and factory-built housing industries #1 market share in Class A
motor homes, #2 share in motor homes overall and #2 market share in
manufactured housing Nearly 60 years of successful operating history in core
manufacturing businesses Experienced management team
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6 Leading Producer of Recreational Vehicles & Manufactured
Housing Revenue Distribution Fiscal Year 08 Sales: $1.7 billion Supply 1%
Motor Homes 56% Travel Trailers 13% Mfd. Hsg. 28% Modular 2% Lumber less than
1%
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7 Plants Producing Affordable Housing 17 Manufactured Housing, 2
Modular Plants Producing Recreational Vehicles 5 Travel Trailer, 3 Motor Home
Plants Producing Components 1 Facility Corporate Office Approximately 7,500
employees Mexicali, Mexico Facilities Are Strategically Located
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8 Historical Perspective In 1999 and 2000, a prolonged
manufactured housing slump began, and the RV market experienced a sharp but
brief downturn Prior management adopted centralized, functional operational
structure The combination set off several years of net losses These results
led to a series of management changes Current leadership in place since March
2005 Last three years in turnaround mode Significant progress made in
organizational structure, products, operations, costs and balance sheet
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9 Operating Strategy Concentrate on core businesses
Manufacturing high-quality, high-value RVs & homes Decentralize
operations Empowering those closest to the customer Increase market share
Targeting areas of greatest sales & profit potential Reduce costs/improve
efficiencies Match manufacturing capacity to demand Focus energy &
resources on regaining consistent profitability Develop and implement
financial strategies that improve liquidity and reduce debt
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10 Three Years of Restructuring Actions Sold or closed non-core
businesses Stemmed losses and/or eliminated distractions Housing retail &
finance; certain supply operations; folding trailers Closed or consolidated
plant locations; realigned product mix Improved capacity utilization and
labor efficiency Organized operations into market-focused profit centers Two
stand-alone business units in RV Group; two regional divisions in Housing
Group Lowered operating expenses by $33M in FY 06; additional $55M in FY 07
Average reduction of approximately $10M per quarter through first three
quarters of FY 08
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11 Three Years of Restructuring Actions, contd. Reorganized
sales force RV sales aligned by brand; Housing sales aligned by
plant-specific products Decentralized service and warranty Pushed authority
for product development down Decisions made closer to customers at division,
regional or plant level rather than Group or Corporate level Expanded
business units authority Sales, materials, manufacturing, environmental, and
operational IT functions Increased revenue per associate by 15% Reduced corporate
officers: 24 to 9
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12 Current Status Major turnaround initiatives are largely in
place Expect to see full annual impact of reductions in cost structure
throughout fiscal 2009 Other changes will be ongoing Continued improvements
in products, sales, manufacturing, service, with sustained positive financial
impact expected Immediate actions focused by business unit Initiatives to
increase market share, improve volume and capacity utilization, and reach
acceptable profitability in each Near-term strategic plans going forward
Expansion of RV product offerings to cover additional price points and niches
with significant profit potential Continued pursuit of opportunities in
modular housing market Aggressive approach to turning or closing
non-performing business units and selling idle assets to bolster liquidity,
reduce debt Developing future growth strategies
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13 RV Group
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14 RV Group Overview Fleetwood is a leading producer of
recreational vehicles in North America The business is organized into two
primary divisions: motor homes and travel trailers FY 2008 sales of $1.20
billion; 18,700 units shipped More than 1.7 million Fleetwood RVs sold since
Companys inception Strong, well-established dealer networks and brands More
than 700 independent dealer locations
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15 Favorable Long-Term Industry Trends Travel data continues to
be positive RVing remains relatively inexpensive mode of vacation travel
However, fuel prices are short-term financial factor Lower consumer
confidence affecting sales Source: Recreation Vehicle Industry Association
(www.RVIA.org) and RV Rental Association Survey 1980 2008* Most recently
reported RV rental activity indicated growth of 30% in 2007 RVers enjoy 16K+
campgrounds & resorts, plus other destination sites 2007 shipments of
353,400 were the fourth-highest in 30 years 0 50,000 100,000 150,000 200,000
250,000 300,000 350,000 400,000 All RV Shipments Travel Trailers Motor Homes
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16 Favorable Long-Term Industry Trends, Contd. Demographics
support promising long-term outlook Baby boomers entering prime age range for
purchase of RVs Expanding market People living longer; entering RV market at
younger age 0 20000 40000 60000 80000 100000 120000 1997 2005 2010 2015 2020
2025 2030 Population over 55 in thousands 15 20 25 30 35 40 45 50 Percent of
population age 55+ People Over Age of 55 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
18-34 35-44 45-54 55-64 65-74 75+ RV Ownership by Age Groups Source:
University of Michigan 2005 Survey; U.S. Census Bureau
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17 Industry-Leading Position #2 motor home manufacturer overall
(16.9% retail market share) #1 Class A motor home manufacturer (20.4% retail
market share) #4 Class C motor home manufacturer (10.9% retail market share)
#4 travel trailer manufacturer (4.3% retail market share) Statistical
Surveys, Inc. Data Through March 2008 Travel Trailer Class C Class A
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18 Motor Homes
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19 Motor Homes Cyclical downturn began in 2005 Rising fuel
prices and uncertainty about interest rates led to lower consumer confidence
Early CY 2007 shipments rebounded; subprime woes halted progress by fall FY
2008 Fleetwood sales of $920 million (79% of RV Group sales) Increased
product offerings: New floor plans; more multiple slide-outs offered Expanded
use of our leading full-wall slide-out technology New entry-level Class A
models New more fuel-efficient (Pulse/Icon) and affordable (Ranger/Sport)
Class C models
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20 Motor Home Leaders Retail Market Share (Class C) Source:
Statistical Surveys, Inc. Data Through March 2008 Up from 9.4% this time 2007
22.1% 14.8% 13.9% 10.9% 10.8% 0% 5% 10% 15% 20% 25% WGO COA THO FLE Jayco
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21 Motor Home Leaders Retail Market Share (Class A) Source:
Statistical Surveys, Inc. Data Through March 2008 Up from 20.1% this time
2007 20.4% 16.4% 14.7% 12.9% 12.1% 0% 5% 10% 15% 20% 25% FLE MNC WGO THO
Tiffin
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22 Travel Trailers
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23 Travel Trailers FY 2008 sales of $219 million (19% of RV
Group) Industry downturn began in late fall 2006 Challenging competitive
market environment Fleetwood has lost market share in core products Closed
plants, discontinued product lines, dealers lowered inventory by 7,000+ units
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24 Travel Trailer Turnaround Actions Ongoing product innovation
to provide improved, more competitive products New models to be introduced
Spring 08 Restructuring initiatives in process Closed five underperforming
plants; redistributed product manufacturing throughout country to increase
efficiencies Discontinued slower-turning floor plans and models Opened
cost-efficient plant in Mexicali May 07 to build entry-level products
Negative impact of restructuring on FY 08 results greater than expected
Realized sustainable reductions in material, warranty and overhead costs
Additional restructuring in January 08 to yield annualized savings of $4M CY
2008 labor efficiencies are best in more than five years, ex-FEMA production
Continued improvements in capacity utilization, operating results, and
revenues expected
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25 Travel Trailer Leaders Retail Market Share Source:
Statistical Surveys, Inc. Data Through March 2008 31.7% 15.8% 10.3% 4.3% 3.7%
0% 5% 10% 15% 20% 25% 30% 35% THO Forest River Jayco FLE MNC
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26 Recent Accomplishments RV Group Successful product
introductions Motor home market share has held steady Minimal discounting in
a competitive environment Introduced new motor home brands to fill gaps in
Class C market and entry-level Class As Travel trailer market share decline
has stabilized Product planning and development process significantly
improved New strategic alliance to provide RV financing Bank of America &
Fleetwood formed Fleetwood Financial Services (FFS) in March RV dealers
provided with access to lower flooring costs and competitive retail financing
for their customers B of A has a leading share of financing in the RV industry
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27 Housing Group Single-Section Multi-Section Modular/Military
Designer Interiors
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28 Housing Group Overview Single and multi-section homes built
at plants nationwide Building in a factory provides advantages in cost,
speed, labor efficiency and use of materials Manufactured housing unit builds
residential homes to the HUD code Homes are primarily distributed through
traditional independent dealers New modular business Trendsetter Homes
builds residential multi-family homes and military barracks Complies with
model building codes adopted by states and municipalities, similar to
site-built codes Distribution includes builders/developers and government,
including military Housing Group has remained profitable in very difficult
environment
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29 Advantages of Building in Factories Lower cost per square
foot for similar home compared to site-built Speed of delivery Averages half
the time from decision to completion Availability of labor Controlled
manufacturing environment More environmentally friendly Positive demographics
in key segments Immigrants, empty nesters, first-time buyers
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30 Manufactured Housing Industry Conditions Retail demand is
highly correlated to availability of competitive financing Industry
experienced its subprime crisis in late 90s Result was fewer lenders with
tighter underwriting standards Lenders require high FICO scores, as well as
higher interest rates and higher down payments than mortgage lenders
Land/home loan terms more competitive, but qualification still difficult Our
traditional customers, often first-time homebuyers or seniors downsizing
their homes, frequently found monthly payments lower on site-built homes or
condos due to subprime lending Reduced industry manufacturing capacity,
dealer locations, and retail inventory
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31 Manufactured Housing Industry Outlook Constant, growing
demand in U.S. for affordable housing Glut of site-built foreclosures and
developer inventories is likely to delay growth opportunity Improved
competitive position Tightening lending policies on site-built homes will
help factory-built housing Declining vacancies and higher rents in apartments
Favorable opportunities for potential lenders Continuing product improvements
Aesthetics, functionality, durability and set-up all improved since industry
peak and continue to be a focus
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32 Manufactured Housing Division Second largest manufactured
housing builder Sales of $468 million in FY 08 12,810 Fleetwood manufactured
homes built in calendar 2007 More than 1.3 million Fleetwood homes sold since
Companys inception Dramatically improving customer satisfaction indices 19
strategically located facilities 1,400 strong, independent retailers
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33 Manufactured Housing Leaders Source: Statistical Surveys,
Inc. through February 2008 2008 YTD Retail Market Share Up from 14.3% this
time 2007 30.0% 14.4% 10.0% 5.1% 4.2% 0% 5% 10% 15% 20% 25% 30% Clayton FLE
CHB SKY CAV
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34 Modular Division Modular home and condominium projects
Fleetwood is pursuing business with developers and builders One condominium
project finished; completed 36 units in another Fleetwood has completed three
barracks projects Bidding process is proceeding on several others Military
barracks and other housing Positive outlook for modular housing expansion in areas
where Fleetwood is positioned
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35 Current Initiatives Priority on increasing market share, with
accompanying higher volumes and improved labor efficiency Regional product
development Local handling of service and warranty Closer relationships with
distribution network Improved oversight of home set-up through Welcome Home
initiative Improved quality and service Customer Satisfaction Index and
Dealer Satisfaction Index provide objective measurement of progress Continued
pursuit of modular housing opportunities Barracks designed for Fort Bliss
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36 Financial Overview
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37 Recent Results by Segment (Amounts in millions) FY ENDED FY
ENDED Q3 FY08 Q3 FY07 4/27/08 4/29/07 1/27/08 1/28/07 preliminary REVENUES RV
Group $ 1,164.0 $ 1,400.9 $ 243.0 $ 320.1 $ Housing Group 502.0 518.4 96.7
108.7 TOTAL REVENUES $ 1,666.0 $ 1,919.3 $ 339.7 $ 428.8 OPERATING INCOME
(LOSS) RV Group $ (51.6) $ (5.0) $ (12.5) Housing Group (2.5) (2.5) (8.2)
Corporate and Other (3.7) (2.5) (0.7) TOTAL OPERATING INCOME (LOSS) $ (57.8)
$ (10.0) $ (21.4)
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38 Q4 Overview Continued focus on financial and operational
performance Despite a 26% decrease in revenues, Q4 operating loss expected to
only exceed prior year loss of $2.5 million(1) by approximately $3 million(2)
Focus on asset sales and operations to improve liquidity and financial
position Positive Q4 Net Income as a result of gains on real estate sales
Cash and investments increased from $45 million in Q3 to $100 million in Q4
due to asset sales generating $33 million and positive cash flow from
operations Approximately $12 million of additional liquidity was generated
from the sale of folding trailers and settlement of the Coleman litigation in
Q1 1. Excludes current quarter real estate gains, prior year restructuring charges
and discontinued operations. 2. Based on preliminary, unaudited review.
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39 Financial Progress Improved balance sheet Disposition of
Housing retail and finance operations Disposition of 13 idle facilities since
end of FY 2007 Disposition of folding trailer division Payment of $58.8
million accrued interest on 6% CTPS Reduction in borrowing levels on
revolving credit facility Repurchase of $50 million face value of 6%
convertible debt for $31 million Reduced interest expense by $3 million annually
Boosted shareholders equity by ~$15 million
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40 Financial Progress, Contd. Restructuring initiatives
yielding improvements Operating costs reduced by $33 million and $55 million
during FY 06 and FY 07, respectively Focus on labor efficiencies, SG&A
expenses and inventory controls Additional reduction of approximately $10
million per quarter through first three quarters of FY 08 Credit agreement
revised, extended until July 2010 Terms include improved pricing schedule,
lower fees and lower requirements for liquidity test and springing covenant
Recent modifications to permit sale of folding trailer division and
prepayment of 5% debentures
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41 Condensed Balance Sheets (Amounts in thousands) Note: not
updated for recent sale of folding trailer division Jan 27, 2008 Apr 29, 2007
ASSETS Cash and Investments $ 45,079 $ 76,289 Receivables 118,717 123,535
Inventories 183,236 174,910 Other Assets 281,832 328,437 TOTAL ASSETS $ 628,864
$ 703,171 LIABILITIES AND SHAREHOLDERS' EQUITY Short-Term Borrowings $ 108,362
$ 7,314 Other Current Liabilities 200,729 248,004 TOTAL CURRENT LIABILITIES
309,091 255,318 Other Long-Term Liabilities 78,370 86,050 Long-Term Debt
17,482 117,508 Convertible Subordinated Debentures 160,142 160,142 TOTAL
LIABILITIES 565,085 619,018 SHAREHOLDERS' EQUITY 63,779 84,153 TOTAL
LIABILITIES AND EQUITY $ 628,864 $ 703,171
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42 Summary A leader in both the RV and factory-built housing
industries Market expansion opportunities in both industries Primary
businesses have favorable demographic trends Focus on product innovation;
quality manufacturing Improving prospects for consistent profitability Strong
brand recognition Improved financial position and reduced debt Operating
leverage and large NOL provide upside earnings potential as manufactured
housing and RV markets turn
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